Inflation: Why Prices Go Up —

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If you suffer from TLDR (too long didn’t read) here is the synopsis. The Federal Reserve Bank and The Federal Government have worked in tandem to inject (by various means) way, way too much money supply into the economy.  Subsequently, this has devalued everyone’s money–essentially making money worth less. The more they inject in the less each dollar denomination is worth.  In turn, things SEEM to cost more.  In the end, it is the dollar that is weak.  The end.  It’s not brain surgery or rocket science as they say.  It’s no one else’s fault aside from these two entities.  As a result, all of those not part of the elite or the ruling class (all of us) suffer.  As George Carlin aptly said, “It’s a big club and you aint in it”.    Do a deep dive into the history of the Federal Reserve and fractional reserve lending.  Suggested reading:  The Creature From Jekyll Island by G. Edward Griffin.  In 1913, a dollar was worth 1 dollar.  In 2022 that same dollar is worth .3 cents (that’s 3 pennies).  What can you buy with 3 pennies?  Nothing.  That is why you need to bring more dollars to the table.  And now you know.  And as GI Joe used to say, “Knowing is half the battle.” 

Inflation is generally defined as an increase in the price of goods, services and a general overall increase in the cost of living.

Yes, supply and demand do have an effect on prices; however, when inflation is system-wide, its cause can be attributed to something else. Systemic inflation is a result of too much money in circulation. When you walk into a store and you see the cost of an item having risen from $1 to $1.50 what this REALLY means is that the dollar you are carrying in your pocket has less purchasing power. You need more dollars to purchase the same item. What your eyes see and what is actually taking place is an illusion. The purchasing power of our money has been diminished. As of 2022, 40% to 50% of ALL the currency in circulation has been injected into the economy within the last 18 months. This is why everything has become so expensive- especially groceries.

A quick analogy will help explain this concept a little more clearly. Imagine that you are the sole owner of the only baseball card signed by Babe Ruth. That card might be worth 1 million dollars. Conversely, imagine you are an owner of 1 out of 1 million cards signed by Babe Ruth. Your card now might be worth 1 dollar. The more cards in circulation the less the value of the card you own. Money works in exactly the same way. The more of it in circulation the less everyone’s money is worth. Inflation is the hidden tax.

Inflation would not be so bad if income rose proportionately to inflation. However, this is not the case. When this occurs you get stagflation: A situation worse than inflation. Generally wages DO NOT rise at the level of inflation– if at all. This is what makes inflation and stagflation so crippling to the majority of people.

It sounds absurd “too much money in the economy.” You would think the more the better. Everyone would get to have some. Unfortunately money does not work that way– and probably by design.

So, how does too much money get into the economic system? The answer is simple: The Central Bank. The Federal Reserve Bank of The United States of America (which by the way, is a privately owned corporation). Through monetary policy, The Federal Reserve is 100% responsible for the amount of money flowing in and out of our economy. With this power, they indirectly exert control over the entire economy– including prices.

It might be safe to say that most of us express outrage at companies and business owners for price increases. Our conclusion is that “they are all getting rich.” This can not be any further from the truth. And the ultimate irony is that even if a business owner makes more money during an inflationary period, he/she has to turn around and forward those profits forward to the partner companies that have increased their prices. Its a big merry-go-round of more money but no one gets to keep it except those at the beginning of the money flow chain. That is a discussion for another day– the hidden tax known as inflation. The problem of devaluing currency is a systemic domino effect. EVERYONE is affected by inflation– businesses and individuals alike. Now that we have a better understanding of the root cause we can more precisely direct our outrage.

If you would like more in depth understanding on this subject, do some quick research on Austrian economics and inflation.

Remember: Don’t kill the messenger because you don’t like the message. I just work here and report the news. 🙂